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Public and Private Goods

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Suppose that you are the head of a government agency that oversees re-training programs for the unemployed.

a) Discuss whether the service that your agency delivers is a public or private good.

b) Will the private market of demand and supply for labor [as measured by the unemployment rate] lead to an efficient outcome? Why or why not?

c) Discuss how your agency is funded.

d) How well do you think a voluntary contribution scheme work in funding your program?

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Solution Summary

The expert discusses whether the service that your agency delivers in public or private goods. The market demand and supply for labor are determined.

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(a) This service is a public good. A good that is nonrival and nonexclusionary in consumption is a public good. When one receives this service, it does not prevent someone else to receive it (nonrival). Once this service is made available, every unemployed person ...

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